Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/82947
Authors: 
Engström, Per
Year of Publication: 
2003
Series/Report no.: 
Working Paper, Department of Economics, Uppsala University 2003:3
Abstract: 
This paper explores the rationale for unemployment benefits as a complement to optimal non-linear income taxation. High-skilled workers and low-skilled workers face different exogenous risks of being unemployed. As long as the low-skilled workers face a higher unemployment risk, we find that there is a case for over-insuring the low-skilled, hence the unemployment benefits of the low-skilled should be higher than the pure insurance purpose would prescribe. This effect is likely to prevail in a model with a more realistic treatment of the labor market.
Subjects: 
Optimal non-linear income taxation
unemployment benefits
JEL: 
H21
J22
J41
J64
Document Type: 
Working Paper

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